The importance of interoperability in unlocking value from the IoT

By: Wojciech Martyniak

According to the GSMA, the global Internet of Things (IoT) market is expected to be worth more than $1 trillion in revenue by 2025 as the number of IoT connections across the world surpasses 25 billion. If they don’t already, businesses across all industries will have a strategy in place for using IoT technology as a means of unlocking innovation and new revenue streams, and operators will play a key role.

Despite being the most fundamental of an operator’s offerings, connectivity, however, is only expected to represent around five percent of the overall IoT market. The more significant opportunity is instead likely to be in the provision of applications, platforms and services, such as data analytics, management and service assurance. This proportion is supported by the findings of a recent study by Ericsson, in which 80 percent of the multinational telecoms businesses surveyed confirmed that they saw potential value in IoT beyond just providing connectivity, by becoming IoT service enablers or service creators.

Indeed, our own research recently revealed how CIOs and CTOs within the telecoms industry plan to capitalize on this new revenue stream: 28 percent of respondents, for example, plan to provide platforms for third-party services, while just over a quarter (26 percent) indicated that they plan to develop their own applications and IoT services. Additionally, a similar number (24 percent) noted that they intend to monetize connectivity.

The possibilities for operators to develop and maintain a central role in IoT are clearly significant yet capitalizing on them will require a shift in mindset. Sylwia Kechiche, Principal Analyst, IoT, GSMA Intelligence notes, The IoT revenue opportunity is shifting away from simply connecting devices to addressing specific sectors with tailored solutions, and successful ecosystem players will need to adapt their business models in line with these market trends.”

This mentality, then, plays into the digital transformation programs currently being undertaken by operators that, as is common with businesses everywhere, are looking to improve the efficiency of their business operations and the customer experience they offer. As the IoT continues to grow and its ecosystem expands and diversifies, delivering services to new and existing customers will increasingly rely on an operator’s capacity for interoperability—ensuring its services and applications can be leveraged across multi-vendor and multi-carrier connections. Interoperability should, therefore, form an important part of any operator’s digital transformation initiative.

Monetization models

Operators have always focused on how they can best generate revenue from the services they offer their customers. The advent of the IoT, in which telecoms networks will become increasingly vital—particularly once the ultra-low latency, high data capacity, and edge computing capabilities of 5G are finally implemented—will offer a greater opportunity for operators to broaden this focus.

According to a report from the Wireless Broadband Alliance, IoT monetization will come in at least four different forms, each of which will directly benefit operators, and each of which would be impossible to fully achieve without interoperability.


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